Developers Must Pay Prevailing Wages for Privately Financed Public Infrastructure

By Bram Hanono and Greg Woodard

California Labor Code sections 1720 et seq. (the Prevailing Wage Law) ("PWL") require employers (including developers and contractors) engaged in public works projects to pay the prevailing wage to their employees if the project is "paid for in whole or in part out of public funds." The Second Appellate District Court of Appeal recently ruled that private developers must pay prevailing wages for the construction of all public improvements in connection with a development project if public funds are used to finance any part of the public improvements, even if the remaining public improvements are paid for with private funds. The California Supreme Court declined to hear the developer’s appeal. Therefore, developers and contractors could face increased project costs as a result of this case.
 

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The Year 2010 In Review: Safety and Personal Injury Developments

This article is the eighth, and final, in a series summarizing construction law developments for 2010.

By Candace Matson, Harold Hamersmith & Helen Lauderdale

  1. Tverberg v. Fillner Construction, Inc., 49 Cal. 4th 518 (June 2010)

The peculiar risk doctrine is a judicially created exception to the common law rule that a person hiring an independent contractor to perform inherently dangerous work is generally not liable to third parties for injuries resulting from the work. Courts initially used the peculiar risk doctrine to impose upon landowners vicarious liability for the acts of their independent contractors when certain third parties – innocent bystanders or neighboring property owners – were injured by the contractors’ work. It was not until courts expanded the doctrine to include another category of third parties, the employees of the independent contractors, that the Supreme Court stepped in to curtail the exception. In Privette v. Superior Court, 5 Cal. 4th 689 (1993), the Supreme Court held that a hirer of an independent contractor is not vicariously liable to the employees of the independent contractor for injuries caused by risks inherent in the work the contractor was hired to perform.
 

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The Year 2010 In Review: Construction Insurance Issues

This article is the seventh in a series summarizing construction law developments for 2010.

By Candace Matson, Harold Hamersmith & Helen Lauderdale

  1. Forecast Homes, Inc. v. Steadfast Insurance Co., 181 Cal. App. 4th 1466 (4th Dist. Jan. 2010), rev. denied, 2010 Cal. LEXIS 4356

A home developer, acting as a general contractor, hired subcontractors to build homes. The subcontracts all required the subcontractors to defend and hold the developer harmless against any liability arising out of their work and to add the developer to their commercial general liability policies as an additional insured. A construction defect litigation was brought against the developer, but not against the subcontractors. The developer tendered its defense to Steadfast Insurance Company, which insured many of the subcontractors and on whose policies the developer was an additional insured. The insurer refused the tender, maintaining that only the named insured subcontractors could satisfy the per occurrence self-insured retention ("SIR") amounts and none of the subcontractors had done so because they did not incur defense or indemnity costs in the litigation.
 

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The Year 2010 In Review: Prevailing Wage & Employment Law

This article is the sixth in a series summarizing construction law developments for 2010.

By Candace Matson, Harold Hamersmith & Helen Lauderdale

  1. Alameda County Joint Apprenticeship and Training Committee v. Roadway Electrical Works Inc., 186 Cal. App. 4th 185 (1st Dist. June 2010)

A general contractor and its electrical subcontractor working on the project to rebuild the Bay Bridge were sued by various electrical unions, electrical contractors, and electrical contractors’ associations. The plaintiffs asserted claims for unfair and unlawful competition under Business and Professions Code Section 17200 claiming that that defendants were using unauthorized workers to perform work that called for certified electricians under Labor Code Section 3099. The defendants succeeded in obtaining the dismissal of the lawsuit by arguing that the plaintiffs’ claims raised issues with respect to the proper classification of workers, that it was up to the Department of Industrial Relations ("DIR") in the first instance to determine the scope of work that must be performed by certified electricians, and that plaintiffs had failed to exhaust their administrative remedies with the DIR before filing suit.
 

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The Year 2010 In Review: Public Works Projects

This article is the fifth in a series summarizing construction law developments for 2010.

By Candace Matson, Harold Hamersmith & Helen Lauderdale

A. Bidding

  1. Great West Contractors Inc. v. Irvine School District, 187 Cal. App. 4th 1425 (4th Dist. Aug. 2010)

In Great West Contractors, the Fourth District held that a public agency’s rejection of a bid for a public works project on the basis that a corporate bidder did not list its officers’ licenses is a question of bidder responsibility, not bid responsiveness, and therefore a due process hearing was required. The Court of Appeal said that the case is important for two reasons. First, it presents a challenging problem in public contracting law: how to distinguish a "non-responsive" bid from a de facto determination that the bidder is not a "responsible" bidder. Second, the case presents what the court called "an object lesson in how evidence that, at least on its face, tends to show favoritism – indeed, on this record, favoritism most foul – never got squarely presented to, or considered by, the trial court." The Court invited readers of the opinion to judge for themselves whether "stonewalling" might not be a better word than "delay" for describing the public agency’s actions.
 

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The Year 2010 In Review: Prompt Payment Statutes

This article is the fourth in a series summarizing construction law developments for 2010.

By Candace Matson, Harold Hamersmith & Helen Lauderdale

  1. Yassin v. Solis, 184 Cal. App. 4th 524 (2d Dist. May 2010)

Homeowners entered into an agreement with a contractor for home improvement work. The agreement called for the contractor to be paid fixed amounts upon reaching specific milestones on the project, with the final payment of $7,500 due once the work was complete and a certificate of occupancy issued. The homeowners became dissatisfied with the contractor’s work, terminated him from the project, and hired another to complete the work.
 

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The Year 2010 In Review: Mechanic’s Liens, Lis Pendens and Construction Bonds

This article is the third in a series summarizing construction law developments for 2010.

By Candace Matson, Harold Hamersmith & Helen Lauderdale

A. Mechanic’s Liens

1. New Requirement for Mechanic’s Liens (AB 457)

Effective January 1, 2011, Civil Code Section 3084 is amended to require that mechanic’s lien claimants must give notice of certain information included in the lien claim to the property owner and accompany the notice with a proof of service affidavit.
 

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The Year 2010 In Review: Contractor Licensing

This article is the second in a series summarizing construction law developments for 2010.

By Candace Matson, Harold Hamersmith & Helen Lauderdale

1. Loranger v. Jones, 184 Cal. App. 4th 847 (3d Dist. May 2010)

Jones, a licensed contractor, had a workers’ compensation policy covering his employees. Jones unknowingly used an unlicensed subcontractor and knowingly permitted two minors without work permits, and another person without a contractor’s license, to help perform work for Loranger. Loranger refused to pay the final invoice and Jones filed suit for breach of contract. Loranger cross-complained alleging defects and sought disgorgement of monies paid. 
 

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The Year 2010 In Review: Design And Construction Defects Litigation

This article is the first in a series summarizing construction law developments for 2010.

By Candace Matson, Harold Hamersmith & Helen Lauderdale

1. Centex Homes v. Financial Pacific Life Insurance Co., 2010 U.S. Dist. LEXIS 1995 (E.D. Cal. 2010)
 

After settling numerous homeowners’ construction defect claims – and more than ten years after the homes were substantially completed – a home developer brought suit against one of the concrete fabrication subcontractors for the development seeking indemnity for amounts paid to the homeowners, as well as for damages for breach of the subcontractor’s duties to procure specific insurance and to defend the developer against the homeowners’ claims. The subcontractor brought a motion for summary adjudication on the ground the developer’s claims were barred by the ten year statute of repose contained in Code of Civil Procedure Section 337.15.
 

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Congress Increases False Claims Liability for Public Works Contractors

By Bram Hanono

The Fraud Enforcement and Recovery Act (FERA)[1] was signed into law in May 2009. Among other significant changes, FERA expanded the grounds for liability under the False Claims Act (FCA).[2] Public works contractors who work on projects funded with federal funds now stand an increased risk for potential liability under the FCA. The FCA now covers, for example, state and local agency projects where the public agency has received a grant of federal funds to build the project. And it includes projects only partially funded by federal money. Accordingly, federal, state, and local contractors should ensure that they have appropriate compliance systems and controls in place to deal with the enhanced FCA.
 

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